4G surge boosts China Mobile turnover

China Mobile has attributed a 7.1% year-on-year increase in revenues for the first six months of 2014 to the success of its 4G launch, the cellco noting that it had signed up 13.943 million subscribers to its Time Division-Long Term Evolution (TD-LTE) service by 30 June, with that figure jumping to more than 20 million by end-July. In H1 2014 the cellco sold 22 million 4G-enabled handsets and the network was extended to 410,000 base stations across more than 300 cities, while Mobile has set its sights on achieving full year handset sales of 100 million, with 50 million subscribers and a network of 500,000 base stations. Revenues for the six-month period reached CNY324.681 billion (USD52.750 billion), of which CNY297.910 billion (+4.7% y-o-y) was from telecoms services. The growth failed to offset escalating expenses and revenue declines elsewhere, however, and EBITDA dipped 4.4% to CNY118.265 billion, whilst net profits were CNY57.742 billion, down 8.5% y-o-y – although net profit margin remained strong at 17.8%, compared to 20.8% a year earlier. The growing popularity of over-the-top (OTT) applications led to declines in the cellco’s traditional service revenues, with turnover from voice dropping 5.3% and SMS and MMS revenues falling 13.2%. Operating expenses, meanwhile, grew by around CNY30 billion, two thirds of which was attributed to the cost of products sold and ‘other’ operating expenses. Mobile data remains the company’s strongest growth area, with traffic nearly doubling from 222.8 billion MB to 426.5 billion MB and revenues increasing by 52.0% y-o-y.